FT: The International Monetary Fund slashed its forecasts for the world economy on Wednesday, saying that global growth would come almost to a standstill and that losses from US financial assets would top $2,000bn. (Note: that’s $2T in American English.)
The IMF cut its 2009 global growth projection to just 0.5 per cent, a huge downward revision from its previous 2.2 per cent forecast made in November.
WSJ: “A sustained economic recovery will not be possible until the financial sector’s functionality is restored and credit markets are unclogged,” the fund said in its update to its semi-annual World Economic Outlook.
The IMF called for new policies to force the recognition of losses and “sort” firms based on their chances of survival over the medium term. Governments should intervene to help viable institutions with capital injections, while resolving insolvent firms and carving out bad assets either through a “bad bank” approach or some other method, it said.